Contents

Overview

The support of a wide range of stakeholders is critical for the success of the smart metering implementation programme. As part of a programme of stakeholder engagement, the Department of Energy & Climate Change (DECC) has set up a number of working groups to enable representatives from industry, consumer organisations and other bodies to provide advice and expertise on a range of key issues.

Regulatory framework for smart metering

Overall approach to regulation

The GB energy sector is regulated primarily through the Electricity Act 1989 and Gas Act 1986, both of which have been amended on numerous occasions to reflect developments in government policy. These Acts prohibit a number of activities, such as the supply of electricity, except under licence. Licence holders are then required to comply with the relevant conditions contained within their licence; non-compliance with these conditions is enforceable by the Gas and Electricity Markets Authority or Ofgem. Below these licence conditions sit a number of industry codes which contain the technical and commercial obligations that govern participation in licensed activities.

Significant changes to this regulatory framework are being made in order to achieve the government’s vision for every home - and smaller non-domestic premises - to have smart metering equipment. These changes include:

amendments to existing energy licences and industry codes, for example to require suppliers to roll out smart meters, and consequential changes to legislation, licences and codes

the introduction of a new licensable activity relating to communications between suppliers and other parties and smart meters in consumer premises and the appointment of a Data and Communications Company to carry out this licensed activity

the introduction of a new Smart Energy Code; this sets out the rules, rights and obligations for all parties for the new enduring metering arrangements in Great Britain

Process for carrying out regulatory change

The government is, after appropriate consultation, making the regulatory changes that are necessary to implement these arrangements, principally using powers conferred on the Secretary of State by the Energy Act 2008 and extended by the Energy Act 2011. These powers provide for the Secretary of State to make changes to legislation, licences and codes, and to introduce a new licensable activity for the purposes of supporting the roll-out of smart meters. These changes are being made in a number of phases over the duration of the smart metering implementation programme. Further information will be published on this webpage as appropriate.

Amendments to the regulatory framework

The changes to these licences and codes have been phased in tranches of regulation to give businesses and other stakeholders the time to input and influence the detail of the regulatory framework through individual and detailed consultations.

This tranche set out energy supplier and energy network licence modifications in relation to consumer engagement, data access, reporting and security risk assessments and audits in the period before DCC provides services.

This tranche introduced energy supplier and energy network licence conditions to support the creation of a new industry code called the Smart Energy Code (SEC). It also placed requirements on energy suppliers to ensure that smart meters make key data available to domestic and micro-business consumers, and that key smart meter functions are switched on.

The introduction of these first three tranches supported the establishment of the enduring commercial and regulatory framework for smart metering. In September 2013 Smart DCC Ltd, a wholly owned subsidiary of Capita PLC, was awarded the licence to provide smart metering communication services (the ‘DCC Licence’). This award and commencement of the DCC Licence introduced a new licensed entity into the energy market.

Following the award of the DCC Licence, the Government designated the first stage of the SEC. SEC content is being introduced in stages, so that it is in place when the DCC and users of its services need it. The designated version of the SEC was introduced to deal with matters that were required to support the initial operations of the DCC. Further stages have being introduced together with amendments to industry licences where appropriate.

Tranches 4 and 5 (various dates for coming into effect, starting on 31 March 2014)

These tranches included new supply licence conditions to ensure consumer access to data as required by the Energy Efficiency Directive (2012/27/EU) and to support ‘Smart Change of Supplier’. They also contained changes to energy supply licence conditions related to the mandated roll-out of smart metering. These tranches also introduced further content to the SEC and amendments to the DCC Licence principally concerning the development and financing of DCC services.

This tranche includes arrangements for the testing regime that will allow the DCC to demonstrate that all the DCC developed systems work prior to its operational service becoming available, introduces the Smart Meter Key Infrastructure (SMKI) and sets out amendments relating to smart metering system requirements.

It also introduces some minor modifications to the DCC Licences identified which are required to ensure that the original policy and regulatory intent is achieved.

Tranches 7 and 8 (not yet introduced)

Tranches 7 and 8 (SEC 4) predominately includes content that is required in advance of User Integration Testing (UIT) and User Entry.

Secondary Legislation

As part of the tranches of regulation changes described above we used our powers under the Energy Act 2008 to make amendments to the Electricity Act 1989 and Gas Act 1986 (the ‘Acts’) which enabled us to make two new statutory instruments that supported the establishment of the DCC. These are listed below:

Smart Metering Equipment Technical Specifications

Energy suppliers must take all reasonable steps to install smart metering equipment which meets the requirements of the smart metering equipment technical specifications (SMETS).

SMETS 1 was designated by the Secretary of State in December 2012, with minor amendments made to the specification in March 2014. Equipment installed now must be compliant with SMETS 1 if it is to count towards suppliers’ roll-out obligations.

The government has developed drafts of the second version of SMETS (SMETS 2), the Communications Hub Technical Specification (CHTS), the Great Britain Companion Specification (GBCS) and the Security Characteristics for GB Smart Metering, which set out the requirements for the next generation of metering equipment to be installed. These documents and the associated regulatory requirements were notified to the European Commission, as required by the Technical Standards and Regulations Directive, in July 2014. The following publications are available:

SMIP transition governance groups

DECC has worked with industry to develop a Smart Metering Implementation Programme (SMIP) Transition Governance Model. The core role of the Transition Governance Groups included in the model is to support DECC decision making by providing advice and recommendations on issues including planning, risk and issue management and change control for design and regulatory documents. An overview of our transitional governance arrangements is available.

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Information on each of the key groups is provided below. DECC also maintains a Huddle Knowledge Share site which provides access to all relevant governance documents including:

Smart Metering Steering Group (SMSG)

A strategic level forum to review overall progress of the GB smart metering programme, discuss key challenges and resolve significant escalated issues. The SMSG will advise on the high level direction of the overall GB smart metering programme in the context of policy and implementation objectives and benefit realisation. The forum meets quarterly although SMSG can also meet on an ad-hoc basis where required.

Smart Metering Delivery Group (SMDG)

A senior operational level forum through which DECC can work together with key industry and other delivery partners to monitor and drive the delivery of the overall portfolio of GB smart metering programmes, and agree actions required to mitigate key risks and resolve issues that could impact the delivery of the joint programme plan and planned benefits. The forum meets monthly.

Technical and Business Design Group (TBDG)

A working level forum through which DECC can work together with key industry and other delivery partners to pro-actively manage changes to the baseline technical and business design products prior to their inclusion in the SEC, thereby ensuring that the integrity of the end-to-end solution is maintained during transition. The forum meets monthly.

Implementation Managers Forum (IMF)

A working level forum through which DECC can work together with key industry and other delivery partners to review progress of the portfolio of individual contributor projects and programmes towards the delivery of planned milestones and benefits. Where possible it will commission action to mitigate delivery risks and resolve issues. The forum meets monthly.

Members are expected to be Programme Manager/Implementation Manager level from their respective organisations, and have a detailed understanding of both their own programme and how it fits into the overall portfolio of smart metering programmes. Members include: large energy suppliers; smaller energy suppliers; Energy UK; Smart Energy GB; electricity and gas network operators; DCC Licensee; Ofgem; SECAS; metering equipment manufacturers (trade association level).

Regulatory Group (RG)

A working level forum through which key industry and other delivery partners can pro-actively provide advice and support to DECC with its on-going work on the smart metering regulatory framework.

Members are expected to have a detailed understanding of the regulatory framework of the energy market.

Transitional Security Expert Group (TSEG)

A working level expert forum through which DECC can work together with key industry and other security experts to pro-actively manage security risks, amend security requirements and to oversee security assurance, thereby ensuring that the security of the end-to-end solution is maintained during transition until the relevant SEC security governance is in place. The forum meets monthly.

Members are expected to have security expertise and be at Security Lead/Lead Security Architect level within their respective organisations. TSEG members are expected to have a detailed understanding of the smart metering security architecture, security requirements, be experienced in security risk management and have the ability to analyse and impact potential new or changed risks. Membership of the TSEG is by invitation only. Initial members include: large energy suppliers; smaller energy suppliers; Energy UK; electricity and gas network operators; DCC Licensee; Ofgem; SECAS; metering equipment manufacturers (trade association level) with representation from the government’s security and intelligence services.

Transitional SMKI Policy Management Authority Group (TPMAG)

A senior, DECC led, operational level group focused on managing and governing aspects of the Smart Metering Key Infrastructure (SMKI) until SMKI obligations are implemented into the Smart Energy Code (SEC).

The long term governance for SMKI is through the SMKI Policy Management Authority (PMA) which was established as a sub-committee of the SEC Panel from 31 July 2014 with its membership, role and powers defined in SEC Section L. However, the TPMAG will continue to provide governance alongside the PMA for the Subsidiary SMKI Documents that are subject to further consultation before they are implemented into the SEC after which the PMA will become responsible for their governance and TPMAG will be closed.

The membership and meetings of TPMAG are aligned with the PMA membership and meetings to ensure consistency in the advice provided by the PMA and by TPMAG to the SEC Panel and the Secretary of State in support of:

Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures that was published on 19 January 2000; and the subsequent

UK Electronic Communications Act 2000

TPMAG and PMA members include: two large energy suppliers; one smaller energy supplier; one Network Operator; and one independent PKI Specialist with representatives from the DCC Licensee; Ofgem; DECC; and SECAS.

Benefits Monitoring and Review Group (BMRG)

The BMRG provides a forum for representatives of all delivery partners and the wider stakeholder group to review evidence provided by DECC and by group members on the performance of the smart metering rollout and the benefits realised. The BMRG has a key role in advising on the quality of the rollout, the optimisation of benefits realised, reviewing research and evaluation outputs, managing threats and exploiting opportunities for benefit realisation, identifying new benefits, sharing lessons learned, and reviewing and responding to the broadest range of evidence available. The BMRG has an overview and advisory role to DECC on benefits realisation, which will include continued engagement in developing the reporting framework for monitoring the progress and benefits of the rollout.

The BMRG is focused on business operations and the attitudes of consumers towards smart metering that enable benefits, and as such members are expected to have operational knowledge within their own organisation or be able to represent the interests of a segment of consumers. Members from industry are expected to focus on solving issues impacting the realisation of benefits and be sufficiently empowered by their respective organisations to agree actions on their behalf.

Core membership of the BMRG comprises representatives from the following organisations: Age UK, Association of Meter Operators, British Electrotechnical and Allied Manufacturers Association, large energy suppliers, small energy suppliers, District Network Operators, Citizens Advice, Ofgem, Energy UK, Smart Energy GB, Energy Networks Association and Energy Savings Trust. Additional participants will include those who are considered benefit enablers and those who receive benefits of Smart Metering.